UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C. 20549

                                  FORM 10-Q

(X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                                     OR

( )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

            For the quarterly period ending:  September 30, 2000

                      Commission file number: 000-28449

                           UNION BANKSHARES, INC.

                     VERMONT                  03-0283552

                                P.O. BOX 667
                                MAIN STREET
                           MORRISVILLE, VT  05661

                Registrant's telephone number:  802-888-6600

Former name, former address and former fiscal year, if changed since last
report:  Not applicable

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes   [X]      No   [ ]

Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of September 30, 2000:

      Common Stock, $2 par value                3,029,729 shares


                           UNION BANKSHARES, INC.
                              TABLE OF CONTENTS


PART 1  FINANCIAL INFORMATION

Financial Statements
    Union Bankshares, Inc.
    Consolidated Balance Sheet                                          3
    Consolidated Statement of Income - Year to Date                     4
    Consolidated Statement of Changes in Stockholder's Equity           5
    Consolidated Statement of Cash Flows                                6
Notes to Financial Statements                                           8

Management's Discussion and Analysis of Financial Condition
 and Results of Operations                                             10

PART II  OTHER INFORMATION

    Item 6  EXHIBITS AND REPORTS ON FORM 8-K                           26

Signatures                                                             27


Union Bankshares, Inc. and Subsidiaries
Statement of Condition
(Unaudited)

<TABLE>
<CAPTION>
                                                   September 30,    December 31,
(Dollars in Thousands)                                 2000             1999
                                                   -------------    ------------

<S>                                                  <C>              <C>
Assets
  Cash and due from banks                            $ 10,293         $ 11,627
  Federal funds sold and overnight deposits             5,411            3,474
                                                     -------------------------
      Total cash and cash equivalents                  15,704           15,101
  Interest bearing deposits                             2,043            1,957
  Securities available-for-sale                        55,707           60,441
  Federal Home Loan Bank stock                          1,016              939
  Loans held for sale                                   8,936            8,102

  Loans                                               216,324          201,525
    Unearned loan fees                                   (272)            (273)
    Allowance for loan losses                          (2,868)          (2,870)
                                                     -------------------------
      Loans, net                                      213,184          198,382
                                                     -------------------------
  Accrued interest receivable                           2,405            2,199
  Bank premises and equipment, net                      3,861            4,040
  Other real estate owned, net                            137               27
  Other assets                                          4,194            4,288
                                                     -------------------------

      Total assets                                   $307,187         $295,476
                                                     =========================

Liabilities and Stockholders' equity:

Liabilities:
  Deposits:
    Non-interest bearing                             $ 34,196         $ 32,989
    Interest bearing                                  224,958          224,604
                                                     -------------------------
      Total deposits                                  259,154          257,593
  Borrowed funds                                       10,464            2,872
  Accrued interest and other liabilities                3,564            2,791
                                                     -------------------------
      Total liabilities                               273,182          263,256
                                                     -------------------------

Stockholders' equity:
  Common stock ($2 par value; 5,000,000 shares
   authorized; 3,263,689 and 3,263,489 shares
   issued at 9/30/00 and 12/31/99)                      6,527            6,527
  Paid-in capital and surplus                             240              238
  Retained earnings                                    29,492           28,180
  Treasury stock (233,960 shares at 9/30/00
   and 12/31/99)                                       (1,592)          (1,592)
  Accumulated other comprehensive income                 (662)          (1,133)
                                                     -------------------------
      Total stockholders' equity                       34,005           32,220
                                                     -------------------------

      Total liabilities and stockholders' equity     $307,187         $295,476
                                                     =========================
</TABLE>

See accompanying notes to unaudited financial statements


Union Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended              Nine Months Ended
                                                               September 30,                   September 30,
                                                           --------------------            --------------------
(Dollars in Thousands)                                     2000            1999            2000            1999
                                                           ----            ----            ----            ----

<S>                                                     <C>             <C>             <C>             <C>
Interest income:
  Interest and fees on loans                            $    5,154      $    4,726      $   14,803      $   13,829
  Interest and dividends on investment securities              894             911           2,718           2,733
  Interest on federal funds sold                                95             153             217             309
  Interest on interest bearing deposits                         31              34              91              95
                                                        ----------------------------------------------------------
                                                             6,174           5,824          17,829          16,966
                                                        ----------------------------------------------------------
Interest expense:
  Interest on deposits                                       2,415           2,225           6,961           6,560
  Interest on federal funds purchased                            0               1               4               2
  Interest on borrowed funds                                   178              76             273             237
                                                        ----------------------------------------------------------
                                                             2,593           2,302           7,238           6,799
                                                        ----------------------------------------------------------

      Net interest income                                    3,581           3,522          10,591          10,167

Provision for loan losses                                       63              62             188             250
                                                        ----------------------------------------------------------

      Net interest income after provision for
       loan losses                                           3,518           3,460          10,403           9,917
                                                        ----------------------------------------------------------

Noninterest income:
  Trust department income                                       35              46             111             114
  Service fees                                                 563             554           1,718           1,724
  Security gains                                                 0               0              34               3
  Gain on sale of loans                                         25               7              34              52
  Other                                                         (1)            (19)              8              (4)
                                                        ----------------------------------------------------------
                                                               622             588           1,905           1,889
                                                        ----------------------------------------------------------
Noninterest expense:
  Salaries and wages                                         1,121           1,057           3,432           3,145
  Pension and other employee benefits                          290             264             867             762
  Occupancy expense, net                                       131             134             423             411
  Equipment expense                                            234             264             764             803
  Other operating expense                                      618             731           2,053           2,181
                                                        ----------------------------------------------------------
                                                             2,394           2,450           7,539           7,302
                                                        ----------------------------------------------------------

  Income before income tax expense                           1,746           1,598           4,769           4,504

Income tax expense                                             499             464           1,276           1,354
                                                        ----------------------------------------------------------

  Net income                                            $    1,247      $    1,134      $    3,493      $    3,150
                                                        ==========================================================

Earnings per common share                               $     0.41      $     0.38      $     1.15      $     1.04
                                                        ==========================================================

Weighted average number of common shares outstanding     3,029,718       3,029,438       3,029,593       3,028,134
                                                        ==========================================================

Dividends declared per share                            $     0.24      $     0.22      $     0.72      $     0.66
                                                        ==========================================================
</TABLE>

See accompanying notes to unaudited financial statements


Union Bankshares, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders Equity
(Unaudited)

<TABLE>
<CAPTION>
                                                                                    Accumulated
                                                                                       Other          Total
                                  Common   Paid-in Capital   Retained   Treasury   Comprehensive   Stockholders'
                                  Stock       & Surplus      Earnings     Stock    Income (Loss)      Equity
                                  ------   ---------------   --------   --------   -------------   -------------
(Dollars in Thousands)

<S>                               <C>           <C>          <C>        <C>           <C>             <C>
Balance, December 31, 1999        $6,527        $238         $28,180    $(1,592)      $(1,133)        $32,220

Net income                                                     3,493                                    3,493
Net unrealized holding gain on
 securities available-for-sale,
 net of tax                                                                               471             471
                                                                                                      -------

Comprehensive income                                                                                    3,964
                                                                                                      -------

Cash dividends declared                                       (2,181)                                  (2,181)
Treasury stock purchased                                                                                    0
Exercise of stock option                           2                                                        2
                                                                                                      -------

Balance September 30, 2000        $6,527        $240         $29,492    $(1,592)      $  (662)        $34,005
                                  ===========================================================================
</TABLE>

Union Bankshares, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                 Year to Date
                                                        ------------------------------
                                                        September 30,    September 30,
(Dollars in Thousands)                                      2000             1999
                                                        -------------    -------------

<S>                                                        <C>              <C>
Cash Flows From Operating Activities
  Net Income                                               $ 3,493          $ 3,150
  Adjustments to reconcile net income to net cash
   provided by operating activities
    Depreciation                                               603              624
    Provision for loan losses                                  188              250
    Provision (credit) for deferred income taxes              (102)             219
    Amortization, net                                            0              101
    Write-downs of OREO                                          8               18
    Decrease in unamortized loan fees                           (1)              80
    Increase in loans held for sale                           (800)          (5,849)
    Increase in accrued interest receivable                   (206)             (76)
    (Increase) decrease in other assets                         80             (304)
    Increase (decrease) in income taxes payable               (101)              61
    Increase (decrease) in accrued interest payable            182             (157)
    Increase in other liabilities                              591              291
    Gain on securities                                         (34)              (3)
    Gain on sale of loans                                      (34)             (52)
    (Gain) (loss) on sale of OREO                               (4)              11
                                                           ------------------------

      Net cash provided by operating activities              3,863           (1,636)
                                                           ------------------------

Cash Flows From Investing Activities
  Interest bearing deposits
    Maturities and redemptions                               1,090              788
    Purchases                                               (1,176)            (998)
  Securities available for sale
    Maturities and redemptions                               9,370           16,867
    Purchases                                               (3,888)         (19,947)
  Purchase of Federal Home Loan Bank Stock                     (77)             (35)
  Decrease in loans, net                                   (15,225)          (3,382)
  Recoveries of loans charged off                               99               63
  Purchases of premises and equipment, net                    (424)            (212)
  Proceeds from sale of OREO                                    23              501
  Proceeds from sale of Repossessions                            0               64
  Investment in Ltd Partnerships                               (26)            (373)
                                                           ------------------------

      Net cash used in investing activities                (10,234)          (6,728)

Cash Flows From Financing Activities
  Borrowings, net of repayments                              7,592           (2,801)
  Proceeds from exercise of stock options                        2               31
  Net decrease in demand, NOW, Savings,
   and money market accounts                                (1,489)          10,718
  Net increase (decrease) in time deposits                   3,050             (232)
  Dividends paid                                            (2,181)          (1,687)
                                                           ------------------------

      Net cash provided by financing activities              6,974            6,029
                                                           ------------------------

      (Decrease) increase in cash and cash equivalents     $   603          $(2,335)
Cash and cash equivalents
  Beginning                                                $15,101          $19,196
                                                           ------------------------

  Ending                                                   $15,704          $16,861
                                                           ------------------------

Supplemental Disclosure of Cash Flow Information:
  Interest Paid                                            $ 7,056          $ 6,956
                                                           ========================

  Income Taxes Paid                                        $ 1,480          $ 1,577
                                                           ========================
</TABLE>


UNION BANKSHARES, INC.

NOTES TO FINANCIAL STATEMENTS:

Note 1.  The accompanying interim consolidated financial statements of
Union Bankshares, Inc. (the Company) for the interim period ended September
30, 2000 and 1999 and for the quarters then ended have been prepared in
accordance with the accounting policies described in the company's annual
report to shareholders and Form 10K which are unaudited.  In the opinion of
management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the information contained
herein have been made.  Certain amounts reported in prior periods have been
reclassified for comparative purposes.  This information should be read in
conjunction with the Company's 1999 Annual report, Form S-4, and Form 8K.

Note 2.  Acquisition

Effective November 30, 1999, following the receipt of all required
stockholder, state and federal regulatory approvals, Union Bankshares, Inc.
acquired Citizens Saving Bank and Trust Co.  This makes Union a two bank
holding company.  The accompanying consolidated financial statements
reflect the merger accounted for in a tax-free transaction as a pooling of
interests and are presented as if the companies were combined as of the
earliest period presented.  However, the financial information is not
necessarily indicative of the results of operations, financial position or
cash flows that would have occurred had the acquisition been consumated for
the periods for which it is given effect, nor is it necessarily indicative
of future results of operations, financial position, or cash flows.  The
financial statements reflect the conversion of each outstanding share of
Citizens common stock into 6.5217 shares of Union common stock, with the
exchange of 991,089 shares (net of 196 fractional shares redeemed for
approximately $4,516) of newly-issued Company common stock.

Note 3.  Commitments and Contingencies
In the normal course of business, the Company is involved in various legal
proceedings.  In the opinion of management, after consulting with the
Company's legal counsel, any liability resulting from such proceedings
would not have a material adverse effect on the Company's financial
statements.

Note 4  Earnings Per Share
Earnings per common share amounts are computed based on the weighted
average number of shares of common stock outstanding during the period
(retroactively adjusted for stock dividends) and reduced for shares held in
Treasury.  The assumed conversion of available stock options does not
result in material dilution.

Note 5  Reportable Segments
The company has two reportable operating segments, Union Bank (Union) and
Citizens Savings Bank and Trust Company (Citizens).  Management regularly
evaluates separate financial information for each segment in deciding how
to allocate resources and in assessing performance.

The Company accounts for intersegment sales and transfers as if the sales
or transfers were to third parties, that is, at current market prices.

Information about reportable segments, and reconciliation of such
information to the consolidated financial statements as of and for the
period ended September 30, follows:

<TABLE>
<CAPTION>
                                                          Intersegment            Consolidated
2000                               Union       Citizens    Elimination    Other       Totals
----------------------------------------------------------------------------------------------

<S>                              <C>           <C>            <C>         <C>        <C>
Interest income                  $ 12,008      $  5,821       $   0       $   0      $ 17,829
Interest expense                    4,652         2,585           0           1         7,238
Provision for loan loss                 0           188           0           0           188
Service fee income                  1,355           363           0           0         1,718
Income tax expense (benefit)          999           334           0         (57)        1,276
Net income (loss)                   2,921           675           0        (103)        3,493
Assets                            205,104       101,622         (17)        478       307,187

<CAPTION>
                                                          Intersegment            Consolidated
1999                               Union       Citizens    Elimination    Other       Totals
----------------------------------------------------------------------------------------------

<S>                              <C>           <C>            <C>         <C>        <C>
Interest income                  $ 11,117      $  5,849       $   0       $   0      $ 16,966
Interest expense                    4,284         2,514           0           1         6,799
Provision for loan loss                63           187           0           0           250
Service fee income                  1,292           432           0           0         1,724
Income tax expense (benefit)          910           454           0         (10)        1,354
Net income (loss)                   2,563           815           0        (228)        3,150
Assets                            195,598       102,206           0         370       298,174
</TABLE>

Amounts in the "Other" column encompass activity in Union Bankshares, Inc.,
the "parent company."  Holding company assets are stated after intercompany
eliminations.


       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS

                                   GENERAL

The following discussion and analysis provides information regarding Union
Bankshares, Inc.'s (Union's) financial position as of September 30, 2000
and as of December 31, 1999, and its results of operations for the three
and nine months ended September 30, 2000 and 1999.  This discussion should
be read in conjunction with the information in this document under
Financial Statements and related notes and with other financial data
appearing elsewhere in this filing.  In the opinion of Union's management,
the unaudited interim data reflect all adjustments, consisting only of
normal recurring adjustments, necessary to fairly present Union's
consolidated financial position and results of operations to be expected
for the interim period.  Management is not aware of the occurrence of any
events after September 30, 2000, which would materially affect the
information presented below.

Union's common stock was listed on the American Stock Exchange on July 13,
2000 with an opening price of $15.125 and it closed on November 10, 2000 at
$17.75.

The millennium change was basically a non-event as far as problems and both
banks completed their year-end processing on schedule.

On February 4, 2000, Citizens upgraded their main application software from
Jack Henry 20/20 to Jack Henry Silverlake.  On that day, Union Bank became
the Electronic Data Processing Server for Citizens.  Therefore, both of
Union's subsidiaries are processed on Union Bank's IBM AS400 located in
Morrisville, Vermont.  The transition was planned to be as transparent as
possible to customers and line staff of Citizens.  Citizens reimburses
Union for costs incurred under a data processing agreement between the
banks.  Intercompany revenues and costs have been eliminated in
consolidation.  Only a few other, non-material operational changes have
resulted from the switch and internal controls have been maintained.

The Company may from time to time make written or oral statements that are
considered "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995.  Forward-looking statements may
include financial projections, statements of plans and objectives for
future operations, estimates of future economic performance and assumptions
relating thereto.  The Company may include forward-looking statements in
its filings with the Securities and Exchange Commission, in its reports to
stockholders, including this Quarterly Report, in other written materials,
and in statements made by senior management to analysts, rating agencies,
institutional investors, representatives of the media and others.

By their very nature, forward-looking statements are subject to
uncertainties, both general and specific, and risk exists that predictions,
forecasts, projections and other estimates contained in forward-looking
statements will not be achieved.  Also when we use any of the words
"believes," "expects," "anticipates" or similar expressions, we are making
forward-looking statements.  Many possible events or factors could affect
the future financial results and performance of our company.  This could
cause results or performance to differ materially from those expressed in
our forward-looking statements.  The possible events or factors that might
affect our forward-looking statements include, but are not limited to, the
following:

*     uses of monetary, fiscal and tax policy by various governments
*     political, legislative or regulatory  developments in Vermont or the
      United States including changes in laws concerning taxes, banking and
      other aspects of the financial services industry
*     developments in general economic or business conditions, including
      interest rate fluctuations, market fluctuations and perceptions, and
      inflation
*     changes in the competitive environment for financial services
      organizations
*     the Company's ability to retain key personnel
*     changes in technology including demands for greater automation
*     adverse changes in the securities market

When relying on forward-looking statements to make decisions with respect
to the Company, investors and others are cautioned to consider these and
other risks and uncertainties.

                            RESULTS OF OPERATIONS

The Company's net income for the quarter ended September 30, 2000 was $1.2
million, compared with net income of $1.1 million for the third quarter of
1999.  Net income per share was $.41 for the third quarter of 2000 compared
to $.38 for the same quarter of 1999.   Net income for the first nine
months of 2000 was $3.5 million, compared with $3.1 million for the same
period in 1999.  Net income per share was $1.15 for the first nine months
of 2000 compared to $1.04 for the comparable period in 1999.

Net Interest Income.   The largest component of Union's operating income is
net interest income, which is the difference between interest and dividend
income received from interest-earning assets and the interest expense paid
on its interest-bearing liabilities.

Yields Earned and Rates Paid.  The following tables show, for the periods
indicated, the total amount of income recorded from interest-earning
assets, and the related average yields, the interest expense associated
with interest-bearing liabilities, expressed in dollars and average rates,
and the relative net interest spread and net interest margin.  All yield
and rate information is calculated on an annualized basis.  Yield and rate
information for a period is average information for the period, and is
calculated by dividing the income or expense item for the period by the
average balances of the appropriate balance sheet item during the period.
Net interest margin is net interest income divided by average interest-
earning assets.  Nonaccrual loans are included in asset balances for the
appropriate periods, but recognition of interest on such loans is
discontinued and any remaining accrued interest receivable is reversed, in
conformity with federal regulations.  The yields and net interest margins
appearing in the following tables have been calculated on a pre-tax basis:

<TABLE>
<CAPTION>
                                                          Three months ended September 30,
                                      ----------------------------------------------------------------------
                                                      2000                                 1999
                                      ---------------------------------     --------------------------------
                                                    Interest    Average                  Interest    Average
                                      Average       Earned/     Yield/      Average      Earned/     Yield/
                                      Balance        Paid        Rate       Balance       Paid        Rate
                                      -------       --------    -------     -------      --------    -------
                                                               (dollars in thousands)

<S>                                   <C>           <C>         <C>        <C>           <C>         <C>
Average Assets:
  Federal funds sold                  $  5,978      $   95      6.36%      $ 12,061      $  153      5.07%
  Interest bearing deposits              2,010          31      6.17%         2,374          34      5.73%
  Investments (1) (2)                   58,275         894      6.33%        59,933         911      6.26%
  Loans, net (1), (3)                  223,429       5,154      9.39%       208,120       4,726      9.18%
                                      -------------------------------------------------------------------
Total interest-earning assets (1)      289,692       6,174      8.68%       282,488       5,824      8.36%

Cash and due from banks                  9,288                                9,007
Premises and equipment                   3,950                                4,244
Other assets                             4,531                                2,389
                                      --------                             --------
      Total assets                    $307,461                             $298,128
                                      ========                             ========
Average Liabilities and
 Shareholders' Equity:
  NOW accounts                        $ 34,177      $  163      1.91%      $ 34,440      $  159      1.85%
  Savings and money market accounts     90,397         851      3.77%        89,778         796      3.55%
  Certificates of deposit              100,310       1,401      5.59%        99,840       1,270      5.09%
  Borrowed funds                        10,522         178      6.77%         4,063          77      7.58%
                                      -------------------------------------------------------------------
      Total interest-bearing
       Liabilities                     235,406       2,593      4.41%       228,121       2,302      4.04%

Non-interest bearing deposits           33,650                               33,305
Other liabilities                        5,103                                4,660
                                      --------                             --------
      Total liabilities                274,159                              266,086

Shareholders' equity                    33,302                               32,042
                                      --------                             --------
      Total liabilities and
       shareholders' equity           $307,461                             $298,128
                                      ========                             ========
Net interest income (1)                             $3,581                               $3,522
                                                    ======                               ======
Net interest spread (1)                                         4.27%                                4.32%
                                                                ====                                 ====
Net interest margin (1)                                         5.11%                                5.11%
                                                                ====                                 ====

<CAPTION>
                                                           Nine months ended September 30,
                                      ----------------------------------------------------------------------
                                                      2000                                 1999
                                      ---------------------------------     --------------------------------
                                                    Interest    Average                  Interest    Average
                                      Average       Earned/     Yield/      Average      Earned/     Yield/
                                      Balance        Paid        Rate       Balance       Paid        Rate
                                      -------       --------    -------     -------      --------    -------
                                                               (dollars in thousands)

<S>                                   <C>           <C>         <C>        <C>           <C>         <C>
Average Assets:
  Federal funds sold                  $  4,808      $   217     6.02%      $  8,559      $   309     4.80%
  Interest bearing deposits              2,020           91     6.01%         2,279           95     5.54%
  Investments (1) (2)                   57,216        2,718     6.53%        60,626        2,733     6.21%
  Loans, net (1), (3)                  213,162       14,803     9.39%       202,174       13,829     9.21%
                                      -------------------------------------------------------------------
Total interest-earning assets (1)      277,206       17,829     8.72%       273,638       16,966     8.37%

Cash and due from banks                  8,844                                9,009
Premises and equipment                   4,013                                4,386
Other assets                             5,993                                5,413
                                      --------                             --------
      Total assets                    $296,056                             $292,446
                                      ========                             ========
Average Liabilities and
 Shareholders' Equity:
  NOW accounts                        $ 32,779      $   481     1.96%      $ 33,415      $   473     1.89%
  Savings and money market accounts     90,216        2,509     3.71%        85,881        2,247     3.49%
  Certificates of deposit               99,628        3,971     5.31%        99,566        3,840     5.14%
  Borrowed funds                         5,587          277     6.61%         5,459          239     5.84%
                                      -------------------------------------------------------------------
      Total interest-bearing
       Liabilities                     228,210        7,238     4.23%       224,321        6,799     4.03%

Non-interest bearing deposits           32,688                               31,921
Other liabilities                        2,874                                4,383
                                      --------                             --------
      Total liabilities                263,772                              260,625

Shareholders' equity                    32,284                               31,821
                                      --------                             --------
      Total liabilities and
       shareholders' equity           $296,056                             $292,446
                                      ========                             ========
Net interest income (1)                             $10,591                              $10,167
                                                    =======                              =======
Net interest spread (1)                                         4.49%                                4.34%
                                                                ====                                 ====
Net interest margin (1)                                         5.23%                                5.07%
                                                                ====                                 ====

<FN>
(1)   Average yield reported on a tax-equivalent basis.
(2)   The average balance of investments is calculated using the amortized
      cost basis.
(3)   Net of unearned income and allowance for loan loss.
</FN>
</TABLE>


Union's net interest income increased by $59 thousand, or 1.7%, to $3.6
million for the three months ended September 30, 2000, from $3.5 million
for the three months ended September 30, 1999.  This increase was due to the
spread between yields earned on assets versus paid on liabilities. The net
interest spread decreased by 5 basis points to 4.27% for the three months ended
September 30, 2000, from 4.32% for the three months ended September 30, 1999
as interest rates paid on deposits have begun to move upward in response to
the earlier increase in the prime rate.  The net interest margin for the
2000 period remained unchanged from the 1999 period at 5.11%.

Union's net interest income year to date was $10.6 million compared to the
prior year of $10.2 million or an increase of 4.2% between the two years.
The net interest spread increased by 15 basis points to 4.49% for the nine
months ended September 30, 2000 from 4.34% for the nine months ended
September 30, 1999.  This increase was fueled by the six increases in the
prime rate since June 30, 1999 which has taken it from 7.75% to 9.50%. The
net interest margin for the 2000 period increased to 5.23% from 5.07% for
the 1999 period or an increase of 16 basis points.

Rate/Volume Analysis.  The following table describes the extent to which
changes in interest rates and changes in volume of interest-earning assets
and interest-bearing liabilities have affected Union's interest income and
interest expense during the periods indicated.  For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to:

*     changes in volume (change in volume multiplied by prior rate);
*     changes in rate (change in rate multiplied by current volume); and
*     total change in rate and volume.

Changes attributable to both rate and volume have been allocated
proportionately to the change due to volume and the change due to rate.

<TABLE>
<CAPTION>
                                         Three Months Ended September 30, 2000 Compared
                                            to Three Months Ended September 30, 1999
                                              Increase/(Decrease) Due to Change In
                                         ----------------------------------------------
                                                  Volume      Rate         Net
                                                  ------      ----         ---
                                                     (dollars in thousands)

<S>                                               <C>         <C>        <C>
Interest-earning assets:
  Federal funds sold                              $ (77)      $  19      $ (58)
  Interest bearing deposits                          (5)          2         (3)
  Investments                                       (26)          9        (17)
  Loans, net                                        321         107        428
                                                  ----------------------------
      Total interest-earning assets                 213         137        350
Interest-bearing liabilities:
  NOW accounts                                       (1)          5          4
  Savings and money market accounts                   5          50         55
  Certificates of deposit                             6         125        131
  Borrowed funds                                    122         (21)       101
                                                  ----------------------------
      Total interest-bearing liabilities            132         159        291
                                                  ----------------------------
Net change in net interest income                 $  81       $ (22)      $  59
                                                  ============================

<CAPTION>
                                          Nine Months Ended September 30, 2000 Compared
                                            to Nine Months Ended September 30, 1999
                                              Increase/(Decrease) Due to Change In
                                         ----------------------------------------------
                                                  Volume      Rate         Net
                                                  ------      ----         ---
                                                     (dollars in thousands)

<S>                                               <C>         <C>        <C>
Interest-earning assets:
  Federal funds sold                              $(135)      $  43      $ (92)
  Interest bearing deposits                         (11)          7         (4)
  Investments                                      (159)        144        (15)
  Loans, net                                        706         268        974
                                                  ----------------------------
      Total interest-earning assets                 401         462        863
Interest-bearing liabilities:
  NOW accounts                                       (9)         17          8
  Savings and money market accounts                 113         149        262
  Certificates of deposit                             2         129        131
  Borrowed funds                                      6          32         38
                                                  ----------------------------
      Total interest-bearing liabilities            112         327        439
                                                  ----------------------------
Net change in net interest income                 $ 289       $ 135      $ 424
                                                  ============================
</TABLE>

Quarter Ended September 30, 2000 compared to Quarter Ended September 30,
1999.

Interest and Dividend Income.  Union's interest and dividend income
increased by $354,000, or 6.08%, to $6.2 million for the three months ended
September 30, 2000, from $5.8 million for the three months ended September
30, 1999.  Average earning assets increased by $7.2 million, or 2.5%, to
$289.7 million for the three months ended September 30, 2000, from $289.7
million for the three months ended September 30, 1999.  Average loans
approximated $223.4 million for the three months ended September 30, 2000
up from $208.1 million for the three months ended September 30, 1999.
Increases in construction loans and residential real estate secured loans
of $6.8 million or 6.6%, the $10.1 million or 14.0% increase in commercial
loans, and the $2.9 million or 27.4% increase in loans to municipalities
was partially offset by the $4.5 million or 23.4% decrease in personal
loans.  Construction Lending was strong throughout 1999 and to date through
2000.  A conscious decision to retain loans packaged for sale in our
portfolio in mid 1999 through mid 2000 accounts for the majority of the
increase in both the residential real estate and commercial loan
portfolios.  The decrease in personal loans is due to a late 1998 decision
to exit the Dealer floorplan business at Citizens.

The average balance of investment securities (including mortgage-backed
securities) decreased by $1.7 million, or 2.8%, to $58.3 million for the
three months ended September 30, 2000, from $59.9 million for the three
months ended September 30, 1999.  The average balance in Interest Bearing
Deposits decreased by $364,000 to $2.0 million from $2.3 million or 15.3%.
The average level of federal funds sold decreased by $6.1 million or 50.8%,
to $5.9 million for the three months ended September 30, 2000, from $12.0
million for the three months ended September 30, 1999.  The decrease in the
investment portfolio, in Federal Funds Sold and in Interest Bearing
Deposits in 2000 reflects the closer attention to cash management since Y2
passed with no liquidity crisis and the continuing growth in our loan
portfolio.  Interest Income on non-loans was $1 million for 2000 compared
to $1.1 million for 1999 reflecting the increase in yields offset by the
decrease in volume.

Interest Expense. Union's interest expense increased by $291 thousand, or
12.64%, to $2.6 million for the three months ended September 30, 2000 from
$2.3 million for the three months ended September 30, 1999.  Average
interest-bearing liabilities increased by $7.3 million, or 3.2% to $235.4
million for the three months ended September 30, 2000, from $228.1 million
for the three months ended September 30, 1999.  Average time deposits
increased $.5 million, or .5%, to $100.3 million for the three months ended
September 30, 2000, from $99.8 million for the three months ended September
30, 1999, while the average balances for money market and saving accounts
increased by $.6 million to $90.4 million for the three months ended
September 30, 2000, from $89.8 million for the three months ended September
30, 1999.  Customers have maintained very liquid positions during the last
9 months as they anticipate the interest rates paid on all deposit
instruments will continue to rise.

The average balance on funds borrowed has increased from $4.1 million on
average in 1999 to $10.5 million in 2000 as Union borrowed from the Federal
Home Loan Bank of Boston for liquidity funding and to match some long-term
commercial loan commitments.

Noninterest Income.  Union's noninterest income increased $34,000, or 5.8%,
to $622 thousand for the three months ended September 30, 2000, from $588
thousand for the three months ended September 30, 1999.  Trust department
income fell to $35 thousand in the third quarter of 2000 from $46 thousand
in the same period of 1999 or a 23.9% decrease.  There was a $25,000 gain
on Sale of Loans for 2000 and $7 thousand for 1999.  Other noninterest
income and service fees (sources of which include deposit and loan
servicing fees, ATM fees, and safe deposit fees) increased by $9 thousand,
or 1.6%, to $563 thousand for the three months ended September 30, 2000,
from $554 thousand for the three months ended September 30, 1999.

Noninterest Expense.  Union's noninterest expense decreased $56 thousand,
or 2.3%, to $2.4 million for the three months ended September 30, 2000,
from $2.5 million for the three months ended September 30, 1999.  Salaries
increased $64,000, or 6%, to $1.1 million for the three months ended
September 30, 2000, from $1.0 million for the three months ended September
30, 1999, reflecting normal salary activity.  Pension and employee benefits
increased $26 thousand or 9.8% to $290 thousand for the three months ended
September 30, 2000, from $264 thousand for the three months ended September
30, 1999 mainly due to a $30,000 increase in retirement plans expense.
Equipment expense decreased $30 thousand to $234 thousand for the three
months ended September 30, 2000, from $264 thousand for the same period in
1999 resulting from decreased depreciation cost on computer equipment and
software which are depreciated as an expense over a time period of three to
five years, a decrease in equipment repair expense and a decrease in the
cost of maintenance contracts.  Other operating expense for the quarter was
$618 thousand down from $731 thousand for the same quarter in 1999.  The
decrease of $113 thousand, or 15.4%, is mainly due to the non-recurring
Year 200 and merger related expenses during the third quarter of 1999.

Income Tax Expense.  Union's income tax expense increased by $35,000, or
7.5%, to $499,000 for the three months ended September 30, 2000, from $463
thousand for the comparable period of 1999 because of our increased income.

Year to Date September 30, 2000 compared to Year to Date September 30,
1999.

Interest and Dividend Income.  Union's interest and dividend income
increased by $863,000, or 5.1%, to $17.8 million for the nine months ended
September 30, 2000, from $17 million for the nine months ended September
30, 1999.  Average earning assets increased by $3.6 million, or 1.3%, to
$277.2 million for the nine months ended September 30, 2000, from $273.6
million for the nine months ended September 30, 1999.  Average loans
approximated $213.2 million for the nine months ended September 30, 2000 up
from $202.2 million for the nine months ended September 30, 1999.
Increases in construction loans of $949 thousand or 16.7%, the $5.1 million
or 6.3% increase in residential real estate secured loans, the $9.2 million
or 10.7% increase in commercial loans, and the $1.7 million or 17.9%
increase in loans to municipalities was partially offset by the $4.7
million or 21.6% decrease in personal loans.  Construction Lending was
strong throughout 1999 and to date through 2000.  A conscious decision to
retain loans packaged for sale in our portfolio in mid 1999 through mid
2000 accounts for the majority of the increase in both the residential real
estate and commercial loan portfolios.  The decrease in personal loans is
due to a late 1998 decision to exit the Dealer floorplan business at
Citizens.

The average balance of investment securities (including mortgage-backed
securities) decreased by $3.4 million, or 5.6%, to $57.2 million for the
nine months ended September 30, 2000, from $60.6 million for the nine
months ended September 30, 1999.  The average level of federal funds sold
decreased by $3.8 million or 43.8%, to $4.8 million for the nine months
ended September 30, 2000, from $8.6 million for the nine months ended
September 30, 1999.  The average balance in Interest Bearing Deposits
decreased by $259,000 to $2.0 million from $2.3 million or 11.3%.  The
decrease in the investment portfolio, Federal Funds Sold and Interest
Bearing Deposits in 2000 reflects the closer attention to cash management
since Y2K passed with no liquidity crises and the continuing growth in our
loan portfolio.  Interest Income on non-loans was $3 million for 2000 and
$3.1 million for 1999 reflecting the increase in yields offset by the
overall decrease in volume.

Interest Expense.  Union's interest expense increased by $439 thousand, or
6.5%, to $7.2 million for the nine months ended September 30, 2000 from
$6.8 million for the nine months ended September 30, 1999.  Average
interest-bearing liabilities increased by $3.9 million, or 1.7%, to $228.2
million for the nine months ended September 30, 2000, from $224.3 million
for the nine months ended September 30, 1999.  Average time deposits
remained unchanged at $99.6 million for the nine months ended September 30,
2000 and for the nine months ended September 30, 1999, while the average
balances for money market and savings accounts increased by $4.3 million to
$90.2 million for the nine months ended September 30, 2000, from $85.9
million for the nine months ended September 30, 1999.  The 5.0% increase in
balances was all in money market accounts as the rate structure was tiered
to remain competitive with other financial institutions.  Customers have
maintained very liquid positions during the last 9 months as they
anticipate the interest rates paid on all deposit instruments will continue
to rise.

The average balance on funds borrowed increased from $5.5 million on
average in 1999 to $5.6 million in 2000.

Noninterest Income.  Union's noninterest income increased $16,000, or .8%,
to $1.9 million for the nine months ended September 30, 2000.  The results
for the period reflected a net gain of $34 thousand from the sale of
securities compared to a $3,000 gain from sales during 1999.  Trust
department income decreased to $111,000 in the nine months of 2000 from
$114,000 in the same period of 1999 or a 2.6% decrease.  Gain on Sale of
Loans dropped $18,000 to $34,000 for 2000 from $52,000 for 1999.  This
change can be explained by management's decision to retain in portfolio a
higher percentage of loans that could be sold due to the interest rate
environment and other reinvestment rates available.  Other noninterest
income and service fees (sources of which include deposit and loan fees,
ATM fees, and safe deposit fees) decreased by $6,000, or .3%, to $1.7
million for the nine months ended September 30, 2000, and for the nine
months ended September 30, 1999

Noninterest Expense.  Union's noninterest expense increased $237,000, or
3.2%, to $7.5 million for the nine months ended September 30, 2000, from
$7.3 million for the nine months ended September 30, 1999.  Salaries
increased $287,000, or 9.1%, to $3.4 million for the nine months ended
September 30, 2000, from $3.1 million for the nine months ended September
30, 1999, reflecting normal salary activity, pay for overtime during the
first quarter of 2000 related to a Systems Conversion at Citizens, and
severance pay for three employees whose positions were eliminated at
Citizens due to the consolidation of certain operations within the
organization.  Pension and employee benefits increased $105 thousand, or
13.8%, to $867 thousand for the nine months ended September 30, 2000, from
$762 thousand for the nine months ended September 30, 1999 mainly due to a
$12,600 increase in health insurance costs, a $74,500 increase in
retirement plans expense, and a $17,600 increase in payroll taxes.  Net
occupancy expense increased $12 thousand, or 2.9%, to $423,000 for the nine
months ended September 30, 2000, from $411,000 for the nine months ended
September 30, 1999 due mainly to the increase in fuel costs and property
tax expense.  Equipment expense decreased $39 thousand or 4.9% to $764
thousand for the nine months ended September 30, 2000, from $803 thousand
for the same period in 1999 primarily resulting from decreased equipment
repair expense and depreciation expense.

Other operating expenses were $2.0 million for the first nine months of
2000 compared to $2.2 million for the same period in 1999.  Year 2000
expenses were $1.5 thousand during 2000 compared to $57 thousand in 1999.
During the period ended September 30, 2000, Union incurred approximately $1
thousand of expenses related to the merger, including legal and advisory
fees compared to $279 thousand during the same period of 1999.  Union
incurred a net one-time listing fee in 2000 of $11,250 from the American Stock
Exchange and a pro-rated annual fee of $4,500.  Other large variance
categories were Charitable Contributions up $42,300 from $25,600 through
September 30, 1999 to $67,900 in 2000.  Printing costs were up $26,800
between years from $31,800 to $58,600 due to the expense of a professional
annual report, proxy and Form 10-K.  State Franchise taxes were up $12,000
between years due to the increase in our deposit base.  FDIC assessment was
up $17,800 due to increased deposit base and the increased assessment rate.
Advertising and public relations expenses were up $18,100 as media exposure
was expanded at Citizens.

Income Tax Expense.  Union's income tax expense decreased by $78,000, or
5.76%, to $1.276 million for the nine months ended September 30, 2000, from
$1.354 million for the comparable period of 1999 because of our $114,000
historic rehabilitation credit and low income housing credits that were
available to us for the  2000 tax year due to our partnership investment in
low income housing projects sponsored by Housing Vermont in our market area
and our increased volume of municipal lending.

                             FINANCIAL CONDITION

At September 30, 2000, Union had total consolidated assets of $307.2
million, including net loans and loans held for sale of $222.1 million,
deposits of $259.2 million and shareholders' equity of $34.0 million.
Based on the most recent information published by the Vermont Banking
Commissioner, in terms of total assets at December 31, 1999, Union Bank
ranked as the 11th largest institution of the 26 commercial banks and
savings institutions headquartered in Vermont, and Citizens ranked as the
20th.

Union's total assets increased by $11.7 million or 4.0% to $307.2 million
at September 30, 2000 from $295.5 million at December 31, 1999.  Total net
loans and loans held for sale increased by $15.6 million or 7.6% to $222.1
million or 72.3% of total assets at September 30, 2000 as compared to
$206.5 million or 69.9% of total assets at December 31, 1999.  Cash and
cash equivalents, including Federal funds sold, increased approximately $.5
million or 3.3% to $15.6 million at September 30, 2000 from $15.1 million
at December 31, 1999.

Securities available for sale decreased from $60.4 million at December 31,
1999 to $55.7 million at September 30, 2000, a $4.7 million or 7.8%
decrease.  Securities maturing have not been replaced dollar for dollar and
some securities have been sold in order to fund the increasing loan demand
and our decision to hold in portfolio loans available for sale.

Deposits increased $1.6 million or .62% to $259.2 million at September 30,
2000 from $257.6 million at December 31, 1999.  Total borrowings increased
$7.6 million to $10.5 million at September 30, 2000 from $2.9 million at
December 31, 1999.  The increase was in borrowing from the Federal Home
Loan Bank under existing lines of credit to fund loan demand.

Loan Portfolio.  Union's loan portfolio (including loans held for sale)
primarily consists of adjustable- and fixed-rate mortgage loans secured by
one-to-four family, multi-family residential or commercial real estate.  As
of September 30, 2000, Union's loan portfolio totaled $225.3 million, or
73.3%, of assets, of which $108.7 million, or 48.3% of gross loans,
consisted of residential mortgages and construction loans, and $67.1
million, or 29.8%, of total loans consisted of commercial real estate
loans.  As of such date, Union's loan portfolio also included $19.9 million
of commercial loans, $14.1 million of municipal loans, and $15.5 million of
consumer loans representing, in order, 8.8%, 6.3% and 6.9% of total loans
outstanding on September 30, 2000.

The following table shows information on the composition of Union's loan
portfolio as of September 30, 2000 and December 31, 1999:

<TABLE>
<CAPTION>
                                 September 30,      December 31,
Loan Type                            2000              1999
----------------------------------------------------------------

<S>                                <C>               <C>
Real Estate                        $ 99,742          $ 87,154
Commercial real estate               67,126            69,807
Commercial                           19,870            16,246
Consumer                             15,507            18,661
Municipal loans                      14,079             9,657
Loans held for sale                   8,936             8,102
                                   --------------------------
      Total loans                   225,260           209,627

Deduct:
Allowance for loan losses             2,868             2,870
Net deferred loan fees, premiums
 & discounts                            272               273
                                   --------------------------
                                      3,140             3,143

                                   $222,120          $206,484
                                   ==========================
</TABLE>

Union originates and sells residential mortgages into the secondary market,
with most such sales made to the Federal Home Loan Mortgage Corporation
(FHLMC).  Union services a $152.1 million residential mortgage portfolio,
approximately $48.4 million of which is serviced for unaffiliated third
parties at September 30, 2000.  Additionally, Union originates commercial
loans under various SBA programs that provide an agency guarantee for a
portion of the loan amount.  Union will typically sell the guaranteed
portion of the loan to other financial concerns and will retain servicing
rights, which generates fee income.  Union capitalizes mortgage servicing
rights on these fees and recognizes gains and losses on the sale of the
principal portion of these notes as they occur.  As of September 30, 2000,
Union serviced $9.4 million of commercial and commercial real estate loans
for unaffiliated third parties.

An increase of $12.6 million or 14.4% in residential real estate loans and
an increase of $3.6 million or 22.3% in commercial loans was partially
offset by a $2.7 million or 3.8% decrease in commercial real estate loans
and a $3.1 million or 16.9% decrease in consumer loans.  There were also
increases in municipal loans outstanding of $4.4 million or 45.8% and in
loans held for sale of $834 thousand or 10.3%.

Asset Quality.  Union, like all financial institutions, is exposed to
certain credit risks related to the value of the collateral that secures
its loans and the ability of borrowers to repay their loans.  Management
closely monitors Union's loan and investment portfolios and other real
estate owned for potential problems on a periodic basis and reports to
Union's Board of Directors at regularly scheduled meetings.

Union had loans on nonaccrual status totaling $1.5 million at September 30,
2000, $951,000 at December 31, 1999 and $912,000 at September 30, 1999.
The increase in non-accrual loans between year-end and September 30, 2000
is mainly due to three commercial loan customers whose properties are in the
process of foreclosure by Union..  Interest income not recognized on such
loans amounted to approximately $228 thousand and $183 thousand as of
September 30, 2000 and 1999, respectively and $183 thousand as of December
31, 1999.

Union had $3.14 million and $3.17 million in loans past due 90 days or more
and still accruing at September 30, 2000 and December 31, 1999,
respectively.  At September 30, 2000, Union had internally classified
certain loans totaling $1.2 million.  In management's view, such loans
represent a higher degree of risk and could become nonperforming loans in
the future.  While still on a performing status, in accordance with Union's
credit policy, loans are internally classified when a review indicates any
of the following conditions making the likelihood of collection highly
questionable:

*     the financial condition of the borrower is unsatisfactory;
*     repayment terms have not been met;
*     the borrower has sustained losses that are sizable, either in
      absolute terms or relative to net worth;
*     confidence is diminished;
*     loan covenants have been violated;
*     collateral is inadequate; or
*     other unfavorable factors are present.

At September 30, 2000, Union had acquired by foreclosure or through
repossession real estate worth $137,000, consisting of commercial property,
undeveloped land and two residential homes.

Allowance for Loan Losses.  Some of Union's loan customers ultimately do
not make all of their contractually scheduled payments, requiring Union to
charge off the remaining principal balance due.  Union maintains an
allowance for loan losses to absorb such losses.  The allowance for loan
losses is maintained at a level which, in management's judgment, is
adequate to absorb credit losses inherent in the loan portfolio.  The
amount of the allowance is based on management's evaluation of the
collectibility of the loan portfolio, including the nature of the
portfolio, credit concentrations, trends in historical loss experience,
specific impaired loans, and economic conditions.  Allowances for impaired
loans are generally determined based on collateral values or the present
value of estimated cash flows.  The allowance is increased by a provision
for loan losses, which is charged to expense and reduced by charge-offs,
net of recoveries.  While Union allocates the allowance for loan losses
based on the percentage category to total loans, the portion of the
allowance for loan losses allocated to each category does not represent the
total available for future losses which may occur within the loan category
since the total allowance for possible loan losses is a valuation reserve
applicable to the entire portfolio.

The following table reflects activity in the allowance for loan losses for
the quarter and nine months ended September 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                        Quarter Ended, September 30,    9 Months Ended, September 30,
                                        ----------------------------    -----------------------------
                                              2000        1999                2000        1999
                                              ----        ----                ----        ----
                                                           (dollars in thousands)

<S>                                          <C>         <C>                 <C>         <C>
Balance at the beginning of period           $2,934      $2,890              $2,870      $2,845
Charge-offs:
  Real Estate                                     0           8                   0          24
  Commercial                                    110           0                 126          30
  Consumer and other                             39          56                 163         193
                                             --------------------------------------------------
      Total charge-offs                         149          64                 289         247
                                             --------------------------------------------------
Recoveries:
  Real Estate                                     0           1                   1           2
  Commercial                                      3           4                  32           9
  Consumer and other                             17          18                  66          52
                                             --------------------------------------------------
      Total recoveries                           20          23                  99          63
                                             --------------------------------------------------

Net charge-offs                                (129)        (41)               (190)       (184)
Provision for loan losses                        63          62                 188         250
                                             --------------------------------------------------
Balance at end of period                     $2,868      $2,911              $2,868      $2,911
                                             ==================================================
</TABLE>

The following table shows the breakdown of Union's allowance for loan loss
by category of loan and the percentage of loans in each category to total
loans in the respective portfolios at the dates indicated:

<TABLE>
<CAPTION>
                                        September 30,           December 31,
                                            2000                    1999
                                     -------------------     --------------------
                                               (dollars in thousands)
                                     Amount      Percent     Amount       Percent
                                     ------      -------     ------       -------

<S>                                  <C>         <C>         <C>          <C>
Real Estate
  Residential                        $  597       40.1%      $  557        42.3%
  Commercial                          1,104       31.7%       1,014        30.6%
  Construction                           95        4.2%          77         3.7%
Other Loans
  Commercial                            518        9.2%         416         8.1%
  Consumer installment                  357        6.7%         448         8.6%
  Home equity loans                      30        1.7%          28         1.8%
  Municipal, Other and Unallocated      167        6.4%         330         4.9%
                                     -------------------------------------------
      Total                          $2,868      100.0%      $2,870       100.0%
                                     ===========================================
Ratio of Net Charge Offs to
 Average Loans (1)                                0.07%                    0.16%
                                                 -----                    -----
Ratio of Allowance for Loan
 Losses to Average Loans                          1.35%                    1.42%
                                                 -----                    -----

<FN>
(1)   Annualized
</FN>
</TABLE>

Investment Activities  At September 30, 2000, the reported value of
investment securities available-for-sale was $55.7 million or 18.1% of its
assets.  Union had no securities classified as held-to-maturity or trading
securities.  The reported value of securities available-for-sale at
September 30, 2000, reflects a negative valuation adjustment of $1 million.
The offset of this adjustment, net of income tax effect, was a $662
thousand decrease in Union's other comprehensive income component of
shareholders' equity and an increase in net deferred tax assets of
$341,000.

Deposits.  The following table shows information concerning Union's
deposits by account type, and the weighted average nominal rates at which
interest was paid on such deposits as of September 30, 2000 and December
31, 1999:

<TABLE>
<CAPTION>
                                   Nine Months Ended, September 30         Year Ended December 31,
                                                 2000                                 1999
                                   -------------------------------      -------------------------------
                                                          (dollars in thousands)
                                               Percent                             Percent
                                   Average     Of Total    Average      Average     of Total    Average
                                   Amount      Deposits     Rate        Amount      Deposits     Rate
                                   -------     --------    -------      -------     --------    -------

<S>                               <C>          <C>          <C>        <C>          <C>          <C>
Non-certificate deposits:
  Demand deposits                 $ 32,688      12.80%                 $ 32,505      12.83%
  Now accounts                      32,779      12.84%      1.96%        34,654      13.67%      1.95%
  Money Markets                     53,788      21.07%      4.41%        49,296      19.45%      4.14%
  Savings                           36,428      14.27%      2.71%        38,064      15.02%      2.71%
                                  -------------------                  -------------------
Total non-certificate deposits:    155,683      60.98%                  154,519      60.97%
                                  -------------------                  -------------------

Certificates of deposit:
  Less than $100,000                76,783      30.07%      5.17%        78,030      30.79%      5.05%
  $100,000 and over                 22,845       8.95%      5.80%        20,870       8.24%      5.48%
                                  -------------------                  -------------------

Total certificates of deposit       99,628      39.02%                   98,900      39.03%
                                  -------------------                  -------------------

Total deposits                    $255,311     100.00%      3.64%      $253,419     100.00%      3.49%
                                  ===================================================================
</TABLE>

The following table sets forth information regarding the amounts of Union's
certificates of deposit in amounts of $100,000 or more at September 30,
2000 and December 31, 1999 that mature during the periods indicated:

<TABLE>
<CAPTION>
                         September 30, 2000      December 31, 1999
                         ------------------      -----------------
                                  (dollars in thousands)

      <S>                     <C>                    <C>
      Within 3 months         $ 6,138                $ 2,301
      3 to 6 months             4,651                 11,872
      6 to 12 months            8,048                  3,751
      Over 12 months            4,771                  3,491
                              ------------------------------
                              $23,608                $21,415
                              ==============================
</TABLE>

Borrowings. Borrowings from the Federal Home Loan Bank of Boston were $10.5
million at September 30, 2000 at a weighted average rate of 6.75%.
Borrowings from the Federal Home Loan Bank of Boston were $2.9 million at
December 31, 1999 at a weighted average rate of 5.94%.  The change between
year end 1999 and the end of the third quarter of 2000 is a net increase of
$7.6 million in borrowing to fund loan demand.

Other Financial Considerations

Market Risk and Asset and Liability Management.  Market risk is the risk of
loss in a financial instrument arising from adverse changes in market
prices and rates, foreign currency exchange rates, commodity prices and
equity prices.  Union's market risk arises primarily from interest rate
risk inherent in its lending and deposit taking activities.  To that end,
management actively monitors and manages its interest rate risk exposure.
Union does not have any market risk sensitive instruments acquired for
trading purposes.  Union attempts to structure its balance sheet to
maximize net interest income while controlling its exposure to interest
rate risk.  Union's Asset/Liability Committee formulates strategies to
manage interest rate risk by evaluating the impact on earnings and capital
of such factors as current interest rate forecasts and economic indicators,
potential changes in such forecasts and indicators, liquidity, and various
business strategies.  Union's Asset/Liability Committee's methods for
evaluating interest rate risk include an analysis of Union's interest-rate
sensitivity "gap", which provides a static analysis of the maturity and
repricing characteristics of Union's entire balance sheet, and a simulation
analysis, which calculates projected net interest income based on
alternative balance sheet and interest rate scenarios, including "rate
shock" scenarios involving immediate substantial increases or decreases in
market rates of interest.

Union's Asset/Liability Committee meets at least weekly to set loan and
deposit rates, make investment decisions, monitor liquidity and evaluate
the loan demand pipeline.  Deposit runoff is monitored daily and loan
prepayments evaluated monthly.  Union historically has maintained a
substantial portion of its loan portfolio on a variable rate basis and
plans to continue this ALM strategy in the future.  The investment
portfolio is classified as available for sale and the modified duration is
relatively short.  Union does not utilize any derivative products or invest
in any "high risk" instruments.

Our interest rate sensitivity analysis (simulation) as of December 1999 for
a flat rate environment projected a Net Interest Income of $10.4 million for
the first nine months of 2000 compared to actual results of $10.6 million
in a rising rate environment, or a 2.3% difference.  Union anticipated an
increase in our net interest margin in the rising rate environment but it
was somewhat mitigated by the placement of three commercial loan customers
into non-accrual during the second quarter of 2000.  Net income was projected
to be $2.9 million compared to actual results of $3.5 million.  The $644
thousand increase in Net Income from projections is mainly due to the increase
in Net Interest Income, the unanticipated $123,000 in tax credits for
rehabilitation snd low income housing taken to date in 2000, the gain on
securities sold, the reduction in equipment expense from what had been
anticipated and higher investments in tax free municipal lending. Return on
Assets was projected to be 1.65% and actual results were 1.57%. Rrturn on
Equity was projected to be 14.54% compared to actual of 14.43%. The results
of these ratios is based on higher net income as explained above offset by
higher average assets and stockholders' equity than had been anticipated.

The Company generally requires collateral or other security to support
financial instruments with credit risk.  As of September 30, 2000, the
contract or notional amount of financial instruments whose contract amount
represents credit risk were as follows:

<TABLE>

<S>                                                             <C>
Commitments to extend credit                                    $15,096,000
Standby letters of credit and commercial letters of credit      $   689,000
Credit Card arrangements                                        $ 2,092,000
Home Equity Lines of Credit                                     $ 3,728,000
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee.

Interest Rate Sensitivity "Gap" Analysis.  An interest rate sensitivity
"gap" is defined as the difference between interest-earning assets and
interest-bearing liabilities maturing or repricing within a given time
period.  A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities.
A gap is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets.  During a
period of rising interest rates, a negative gap would tend to adversely
affect net interest income, while a positive gap would tend to result in an
increase in net interest income.  During a period of falling interest
rates, a negative gap would tend to result in an increase in net interest
income, while a positive gap would tend to affect net interest income
adversely.  Because different types of assets and liabilities with the same
or similar maturities may react differently to changes in overall market
interest rates or conditions, changes in interest rates may affect net
interest income positively or negatively even if an institution were
perfectly matched in each maturity category.

Union prepares its interest rate sensitivity "gap" analysis by scheduling
interest-earning assets and interest-bearing liabilities into periods based
upon the next date on which such assets and liabilities could mature or
reprice.  The amounts of assets and liabilities shown within a particular
period were determined in accordance with the contractual terms of the
assets and liabilities, except that:

*     adjustable-rate loans, securities, and FHLB advances are included in
      the period when they are first scheduled to adjust and not in the
      period in which they mature;

*     fixed-rate mortgage-related securities reflect estimated prepayments,
      which were estimated based on analyses of broker estimates, the
      results of a prepayment model utilized by Union, and empirical data;

*     fixed-rate loans reflect scheduled contractual amortization, with no
      estimated prepayments; and

*     NOW, money markets, and savings deposits, which do not have
      contractual maturities, reflect estimated levels of attrition, which
      are based on detailed studies by Union of the sensitivity of each
      such category of deposit to changes in interest rates.

Management believes that these assumptions approximate actual experience
and considers them reasonable.  However, the interest rate sensitivity of
Union's assets and liabilities in the tables could vary substantially if
different assumptions were used or actual experience differs from the
historical experience on which the assumptions are based.

The following tables show Union's rate sensitivity analysis as of September
30, 2000:

<TABLE>
<CAPTION>
                                                                            September 30, 2000
                                                                       Cumulative repriced within
                                               ----------------------------------------------------------------------------
                                               3 Months       4 to 12       1 to 3        3 to 5        Over 5
                                               or Less        Months        Years         Years         Total         Total
                                               --------       -------       ------        ------        ------        -----
                                                                 (dollars in thousands, by repricing date)

<S>                                            <C>           <C>           <C>           <C>           <C>           <C>
Interest sensitive assets:
  Federal Funds Sold                           $  5,355      $    -0-      $    -0-      $    -0-      $    -0-      $  5,355
  Interest bearing deposits                         396           685           771           191           -0-         2,043
  Investments available for sale (1)                -0-         5,770        17,333        13,761        17,845        54,709
  FHLB Stock                                        -0-           -0-           -0-           -0-         1,016         1,016
  Loans (fixed and adjustable rate)              57,888        42,657        17,093        26,018        81,604       225,260
                                               ------------------------------------------------------------------------------
      Total interest sensitive assets          $ 63,639      $ 49,112      $ 35,197      $ 39,970      $100,465      $288,383
                                               ==============================================================================

Interest sensitive liabilities:
  Certificates of deposit                      $ 27,434      $ 51,713      $ 18,893      $    863      $    -0-      $ 98,903
  Money markets                                  25,705           -0-           -0-           -0-        29,218        54,923
  Regular savings                                 3,859           -0-           -0-           -0-        32,996        36,855
  Now accounts                                   17,715           -0-           -0-           -0-        16,562        34,277
  Borrowed funds                                  4,074         2,225         3,116           639           410        10,464
                                               ------------------------------------------------------------------------------
      Total interest sensitive liabilities     $ 78,787      $ 53,938      $ 22,009      $  1,502      $ 79,186      $235,422
                                               ==============================================================================

Net interest rate sensitivity gap               (15,148)       (4,826)       13,188        38,468        21,279        52,961
Cumulative net interest rate
 Sensitivity gap                                (15,148)      (19,974)       (6,786)       31,682        52,961
Cumulative net interest rate
 sensitivity gap as a
 percentage of total assets                       (4.93)%       (6.50)%       (2.21)%       10.31%        17.24%
Cumulative interest sensitivity gap
 as a percentage of total
 interest-earning assets                          (5.25)%       (6.93)%       (2.35)%       10.99%        18.36%
Cumulative net interest earning
 assets as a percentage of
 cumulative interest-bearing liabilities          (6.43)%       (8.48)%       (2.88)%       13.46%        22.50%

<FN>
(1)   Investments available for sale exclude marketable equity securities
      with a fair value of $998,000 which may be sold by Union at any time.
</FN>
</TABLE>

Simulation Analysis.  In its simulation analysis, Union uses computer
software to simulate the estimated impact on net interest income and
capital under various interest rate scenarios, balance sheet trends, and
strategies.  These simulations incorporate assumptions about balance sheet
dynamics such as loans and deposit growth, product pricing, changes in
funding mix, and asset and liability repricing and maturity
characteristics.  Based on the results of these simulations, Union is able
to quantify its interest rate risk and develop and implement appropriate
strategies.

The following chart reflects the results of our latest simulation analysis
for each of the next three year ends on Net Interest Income, Net Income,
Return on Assets, Return on Equity and Capital Value.  The projection
utilizes a rate shock of 150 basis points from the current prime rate of
9.5%, this is the highest internal slope monitored and shows the best and
worse scenarios analyzed.  This slope range was determined to be the most
relevant during this economic cycle.

                           UNION BANKSHARES, INC.
                  INTEREST RATE SENSITIVITY ANALYSIS MATRIX
                             SEPTEMBER 30, 2000
                               (in thousands)

<TABLE>
<CAPTION>
                                                             Return on   Return on
   Year          Prime    Net Interest    Change     Net      Assets       Equity    Capital    Change
  Ending         Rate        Income         %       Income      %            %        Value       %
  ------         -----    ------------    ------    ------   ---------   ---------   -------    ------

<S>             <C>          <C>          <C>       <C>         <C>        <C>       <C>        <C>
December-00     11.00        14,126        0.68     4,955       1.66       14.59     17,101     (32.03)
                 9.50        14,030        0.00     4,893       1.63       14.42     25,162      00.00
                 8.00        13,935       (0.68)    4,830       1.61       14.24     34,101      35.53

December-01     11.00        14,829        2.68     5,559       1.80       15.06     22,226     (23.91)
                 9.50        14,442        0.00     5,299       1.72       14.43     29,211      00.00
                 8.00        14,059       (2.65)    5,041       1.63       13.80     36,971      26.57

December-02     11.00        15,183        3.73     5,821       1.82       14.51     26,607     (19.45)
                 9.50        14,637        0.00     5,449       1.71       13.76     33,034      00.00
                 8.00        14,102       (3.66)    5,084       1.60       13.10     40,178      21.63
</TABLE>

Liquidity.  Liquidity is a measurement of Union's ability to meet potential
cash requirements, including ongoing commitments to fund deposit
withdrawals, repay borrowings, fund investment and lending activities, and
for other general business purposes.  Union's principal sources of funds
are deposits, amortization and prepayment of loans and securities,
maturities of investment securities and other short-term investments, sales
of securities available-for-sale, and earnings and funds provided from
operations.  In addition, as members of the FHLB, Union's subsidiaries have
access to preapproved lines of credit up to 2.15% of total assets or $6.6
million.

In addition, both subsidiaries maintain Federal Fund lines of credit with
upstream correspondent banks and repurchase agreement lines with selected
brokerage houses.

While scheduled loan and securities payments and FHLB advances are
relatively predictable sources of funds, deposit flows and prepayments on
loans and mortgage-backed securities are greatly influenced by general
interest rates, economic conditions, and competition.  Union's liquidity is
actively managed on a daily basis, monitored by the Asset/Liability
Committee, and reviewed periodically with the Board of Directors.  Union's
Asset/Liability Committee sets liquidity targets based on Union's financial
condition and existing and projected economic and market conditions.  The
committee measures Union's marketable assets and credit available to fund
liquidity requirements and compares the adequacy of that aggregate amount
against the aggregate amount of Union's sensitive or volatile liabilities,
such as core deposits and time deposits in excess of $100,000, term
deposits with short maturities, and credit commitments outstanding.  The
committee's primary objective is to manage Union's liquidity position and
funding sources in order to ensure that it has the ability to meet its
ongoing commitment to its depositors, to fund loan commitments, and to
maintain a portfolio of investment securities.  Since many of the loan
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.

Union's management monitors current and projected cash flows and adjusts
positions as necessary to maintain adequate levels of liquidity.  Although
approximately 78.3% of Union's certificates of deposit will mature within
twelve months, management believes, based upon past experience, that Union
will retain a substantial portion of these deposits.  Management will
continue to offer a competitive but prudent pricing strategy to facilitate
retention of such deposits.  Any reduction in total deposits could be
offset by purchases of federal funds, short-term FHLB borrowings, or
liquidation of investment securities or loans held for sale.  Such steps
could result in an increase in Union's cost of funds and adversely impact
the net interest margin.

Regulatory Capital Requirements.:  Union Bank and Citizens (the Banks) are
subject to various regulatory capital requirements administered by the
federal banking agencies.  Management believes, as of September 30, 2000
that the Banks meet all capital adequacy requirements to which they are
subject.

As of September 30, 2000, the most recent notification from the FDIC
categorized the Banks as well capitalized under the regulatory framework
for prompt corrective action.  To be categorized as well capitalized, the
Banks must maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the table below.  There are no conditions
or events since the notification that management believes have changed
either Bank's category.

The Banks' actual capital amounts (000's omitted) and ratios are presented
in the table:

<TABLE>
<CAPTION>
                                                                                                Minimums
                                                                                               To Be Well
                                                                        Minimums           Capitalized Under
                                                                       For Capital         Prompt Corrective
                                                  Actual              Requirements         Action Provisions
                                           ------------------       -----------------      ------------------
                                           Amount       Ratio       Amount      Ratio      Amount       Ratio
                                           ------       -----       ------      -----      ------       -----

<S>                                        <C>          <C>         <C>          <C>       <C>          <C>
As of September 30, 2000:
Total capital to risk weighted assets
  Union Bank                               $25,204      18.47%      $10,917      8.0%      $13,646      10.0%
  Citizens                                  11,972      17.67%        5,420      8.0%        6,775      10.0%

Tier I capital to risk weighted assets
  Union Bank                               $23,331      17.10%      $ 5,458      4.0%      $ 8,186       6.0%
  Citizens                                  11,122      16.41%        2,711      4.0%        4,067       6.0%

Tier I capital to average assets
  Union Bank                               $23,331      11.41%      $ 8,179      4.0%      $10,224       5.0%
  Citizens                                  11,122      11.07%        4,019      4.0%        5,023       5.0%

Impact of Inflation and Changing Prices.  Union's consolidated financial
statements, included in this document, have been prepared in accordance
with generally accepted accounting principles, which require the
measurements of financial position and results of operations in terms of
historical dollars, without considering changes in the relative purchasing
power of money over time due to inflation.  Banks have asset and liability
structures that are essentially monetary in nature, and their general and
administrative costs constitute relatively small percentages of total
expenses.  Thus, increases in the general price levels for goods and
services have a relatively minor effect on Union's total expenses.
Interest rates have a more significant impact on Union's financial
performance than the effect of general inflation.  Interest rates do not
necessarily move in the same direction or change in the same magnitude as
the prices of goods and services, although periods of increased inflation
may accompany a rising interest rate environment.

PART II      OTHER INFORMATION

ITEM 6:  EXHIBITS AND REPORTS IN FORM 10-Q

A.    Exhibits.
      27 - Financial Data Schedule
B.    Current Reports on Form 8-K
      Report to Shareholders on Third Quarter Results filed on
      October 16, 2000
      Press Release announcing declaration of a third quarter dividend
      filed on October 6, 2000
      Press Release announcing an increase in third quarter earnings and a
      dividend filed on October 6, 2000


                                 SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.

November 14, 2000                      Union Bankshares, Inc.

                                       s/ Kenneth D. Gibbons
                                          Kenneth D. Gibbons
                                          Director and Chief Executive
                                          Officer

                                       s/ Marsha A. Mongeon
                                          Marsha A. Mongeon
                                          Chief Financial Officer and
                                          Treasurer



</TABLE>